Middle East fighting hits global oil supplies — OPEC’s March output posted the largest single-month decline in 40 years

Affected by the ongoing conflict in the Middle East, major OPEC producers' export routes have been severely disrupted, and crude oil production in March recorded the largest month‑on‑month drop in at least forty years.

Latest survey data show OPEC's crude oil daily production plunged7.56 million barrels, falling to22 million barrels/day, a decline of about25%. The core cause is the closure of the Strait of Hormuz, forcing Saudi Arabia, the UAE and Iraq to sharply cut output. This decline is the largest single‑month drop on record since institutions began compiling statistics in 1989.

It should be noted that during the COVID‑19 pandemic in 2020, when global fuel demand collapsed, OPEC implemented larger cuts over a two‑month period; but comparing single‑month drops, this time has already surpassed the 1973 Arab oil embargo —— when global supply fell by about 5 million barrels per day in October–December of that year, and the global oil market was much smaller than it is now.

Iraq— the OPEC member most dependent on the Strait of Hormuz — showed the most significant production cuts, with daily output reduced by2.76 million barrels to 1.63 million barrels. Although Iran has announced exemptions for Iraqi oil shipments, tanker tracking shows no ships are widely using that exemption.

Saudi Arabia and the UAE also recorded significant cuts, but both countries can partially bypass the strait via alternative pipelines, so the impact is relatively mitigated. Among them,Saudi Arabia'sdaily outputfell by 2.07 million barrels to 8.36 million barrels, andthe UAE's dropped by 1.44 million barrels to 2.16 million barrels; even though Saudi Arabia has Red Sea export routes, March exports still fell by about 50%.

The collapse in crude supply directly triggered extreme volatility in international oil prices. Last month WTI and Brent both approached$120 per barrel, while jet fuel, diesel and gasoline prices surged in tandem, keeping end‑user costs under persistent pressure.

On April 7, Brent briefly broke above$111 per barrel, amid reports that U.S. forces struck more than 50 military targets at Iran's oil export hub Kharg Island. The day before, the U.S. issued Iran an ultimatum, demanding compromise by 20:00 ET on April 7 (08:00 Beijing time on April 8) or face strikes on civilian infrastructure. U.S. statements that day further intensified market panic.

At the same time, OPEC’s key ally Russia was also disrupted after Ukrainian drones struck its Baltic oil export terminal, further increasing uncertainty in global energy supplies.